Cascade Designs: Small

“Thinking like a big company,” the maker of specialty outdoor equipment makes the jump from outmoded information technology systems to demand-driven manufacturing.

It was touch and go for the first three years. Cascade Designs Inc., a Seattle-based maker of outdoor equipment for camping and hiking, had purchased a full-scale enterprise resource planning system — the kind usually deployed by companies several times its size. And many were questioning the move.

Privately held Cascade had a tough time convincing its board of directors, major shareholders and business partners that the big software investment was worth it. “For three years, most people would say it wasn’t a good bet,” recalls chief information officer Ken Meidell. Soon, however, they would all become converts.

Cascade only had about $35m in revenues when it acquired the “tier-one” ERP package from Denver-based J.D. Edwards & Co. in early 1998. But the company had no intention of staying small. Lee Fromson, then chief financial officer and now president of Cascade, pushed hard for the deal. “His vision was, let’s take the pain and do it once, even if it is expensive,” says Meidell.

As it happened, sudden growth was just around the corner — or, literally, right down the street. In 2001, Cascade purchased a Seattle neighbor, Mountain Safety Research, from the camping goods cooperative Recreational Equipment Inc. (REI). MSR, founded in 1969 to research the safety of climbing equipment, was nearly the size of its suitor, creating the potential for all sorts of problems in merging the two entities. But those problems never materialized. According to Meidell, who joined the company around the same time to help manage the merger’s IT aspects, Cascade switched MSR’s manufacturing systems over to its own in just three months.

Having a large, sophisticated ERP system in place made all the difference. The J.D. Edwards software was scaled for rapid growth. “They could not have done that acquisition as smoothly … if they were on another system,” says Eric Pozil, account executive with PeopleSoft Inc., which subsequently acquired J.D. Edwards.

Fromson had to justify the ERP purchase by more than a vague promise of growth several years down the line. Cascade’s more immediate need, says Meidell, was to combine two unconnected systems required for manufacturing. Specifically, it needed to link processes for the management of financials and order entry on one hand, and material requirements planning (MRP) and purchasing on the other. Purchase orders generated by the old MRP system were being manually entered into accounting, causing a lag in information and heightening the risk of database errors.

By early 1998, ERP vendors were well established in the market, promising to unify and control business processes like never before. Fromson was a big advocate of Microsoft products, and J.D. Edwards offered OneWorld, an ERP system that would run easily on the Microsoft platform.

“That product really transformed Cascade Designs,” says Meidell, who was a consultant with Ernst & Young at the time, helping with the ERP implementation. It “completely closed the loop” between key systems, he says, while adding functions such as kanban support and support for multiple currencies.

Cascade was able to harvest a large volume of data that helped it better to understand its cost structure and streamline processes. “As the stakes got higher, and the market more competitive, we were able to validate our data,” says Meidell. “That became a huge deal. We really are data-driven.”

The Early Years

Cascade has been a pioneer from the start. It was founded in 1972 by two former Boeing engineers, Jim Lea and John Burroughs. A year earlier, Lea had invented the Therm-a-Rest, the world’s first self-inflating camping mattress. Manufacturing began in Seattle in 1973, then was extended to Ireland in the mid-1980s for European distribution. Sales are now throughout the U.S., Canada, Europe and Australia, via specialty retailers such as REI, Eastern Mountain Sports, Dick’s Sporting Goods, CampMor and Bass Pro Shops. Cascade’s brands include MSR back-country camping equipment, Therm-a-Rest mattresses, Platypus water bottles, SealLine dry bags and rudder systems, Tracks hiking staffs, and Camp K-9, travel gear for dogs. Two other divisions make wheelchair-positioning products and outdoor equipment for the military.“They are doing a lot of things that bigger companies are already doing.”
— Eric Pozil of PeopleSoft

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The business has grown steadily more demanding, says Meidell. No single player dominates, and all struggle to stay close to the consumer. Employees tend to be users of the products, sharing lifestyles and environmental concerns with many of their end-customers. “We can’t fake the credibility,” says Meidell, himself an ardent backpacker and mountain biker.

It’s not all touchy-feely. The retailing base is becoming more concentrated and powerful. Some of Cascade’s most valued customers, such as REI, are also competitors. The company is under enormous pressure to keep inventories down, while getting the right product to stores. Two of its factories operate on same-day turnaround times, while the third has 48 hours. Some 80 percent of orders get filled in less than a day. In addition, the medical products division has shifted to a make-to-order model.

The OneWorld ERP system allowed Cascade’s manufacturing, distribution and sales people to work from the same pool of information. For the first time, sales had a clear idea of how orders could be fulfilled. And the company got a better view of its vendors and customers. As a result, it could react faster to elements beyond its direct control, such as weather and actual buying patterns from year to year.

With OneWorld firmly in place, Cascade was understandably nervous when J.D. Edwards was acquired by Pleasanton, Calif.-based PeopleSoft in the summer of 2003. “We weren’t sure what PeopleSoft was going to do,” says Meidell. “But our questions were answered within a week or two.”

PeopleSoft assured OneWorld users that it would continue to market and support the system, which was renamed EnterpriseOne. Meidell says the vendor went one better. J.D. Edwards, he says, had done a less-than-stellar job of communicating with system installers. PeopleSoft fired off a series of targeted messages, detailing its plans for EnterpriseOne. “They were very proactive in holding our hands throughout the transition,” Meidell says.

Cascade’s core ERP was built around an on-line transaction processing (OLTP) model, combining the three key steps of work order, sales order and purchase order. Financials and product data management were also part of the mix. But J.D. Edwards’ customer-relationship management (CRM) strategy was “a little confusing,” Meidell says, and there were problems with the advanced planning component, especially in the area of constraint-based planning. Cascade suspended its plans to acquire some of those modules when the PeopleSoft deal was announced.

Cascade nevertheless stuck with OneWorld under its new name, as did most users, and PeopleSoft responded with a flurry of enhancements.

Too many, in fact: former PeopleSoft chief executive officer Craig Conway, speaking at the vendor’s user conference a week before he was fired by his board of directors, apologized for bombarding J.D. Edwards customers with upgrades.

Marching Orders

On the positive side, “PeopleSoft marched in and imposed rigor,” says Meidell. “They were saying, let’s get this stuff out of the lab and into the hands of customers.” Still, with major new versions of software appearing every six to nine months, customers didn’t know whether to move forward or wait for the next one.

“There were days when we were frustrated,” admits Meidell, “but we would have been less happy if the products had problems.”

As it happened, Cascade bypassed releases 8.9 and 8.10 of EnterpriseOne, issued in quick succession. It will finally trade up to version 8.11, containing more than 250 product enhancements, in the final quarter of this year. Meidell says Cascade was convinced by PeopleSoft’s new emphasis on “Total Ownership Experience,” including a souped-up user interface and faster installation time. Version 8.11 also has new or enhanced versions of CRM and sales and operations planning.

The bulk of PeopleSoft’s enhancements came in version 8.10, the first to reflect the full impact of the merger with J.D. Edwards, Pozil says. Yet 8.11 boasts substantial changes of its own, including the combination of CRM, ERP and supply-chain planning into a common database.

Cascade’s existing version of EnterpriseOne has already yielded big results. Through the software’s Customer Order Management module, the company boosted its order-fill rate by 20 percent. The percentage of orders filled within three days rose from 70 percent to 95 percent. EnterpriseOne Financial Management slashed the time needed to close financial books from around two weeks to a single day, PeopleSoft claims. And Cascade’s inventory turns went from four a year to five, contributing to an overall increase in profit margins.

For Cascade, version 8.11’s biggest draw might be its focus on “demand-driven” manufacturing. In a press release announcing the new version, PeopleSoft claimed the software will support manufacturing lines “capable of quickly building any model of any product at any time in any quantity.” That’s precisely the type of supply chain that Cascade has labored for years to build.

One could argue that demand-driven manufacturing is just the latest buzz-phrase for describing an old idea, that of rapid response to actual consumption. (Earlier terms include “sense and respond” and the “pull” model of supply chains.) But new efforts to apply lean manufacturing principles, by companies struggling to cut costs while boosting customer service, make the concept more important than ever.

According to a recent report by AMR Research analyst Lora Cecere, the new software “recognizes today’s reality of excess global manufacturing capacity and offers a visionary approach to building best-in-class lean principles into an enterprise system.” Or, as Meidell puts it more succinctly: “We don’t want to build it unless somebody wants to buy it.”

Like most manufacturers today, Cascade is obsessed with controlling inventory. The company competes in a highly seasonal business, its main production period ending in September. After that, it tries to build only what it can sell. Some plants don’t start making product until an order is received.

Cascade Designs at a Glance

The company: A manufacturer of specialty outdoor equipment for backpacking, rafting, camping and hiking. Also makes seat-positioning products for wheelchairs, and outdoor equipment for the military. Brands include Therm-a-Rest, Mountain Safety Research, Platypus, Camp K-9.
History: Founded in 1972 by Jim Lea, inventor of the self-inflating Therm-a-Rest mattress, and John Burroughs
Top executive: Lee Fromson, chief executive officer and president

Headquarters: Seattle

Manufacturing: Four plants, three in the U.S. and one in Cork, Ireland
Revenues: Approximately $100m. Grown from $35m in 1998
Employees: Approximately 430
Supply-chain objectives: Acquire enterprise resource planning and supply-chain systems to accommodate growth through acquisition; combine key business processes into a single database; control inventory and costs; implement a “demand- driven” manufacturing model.
Supply-chain and ERP software vendor: PeopleSoft Inc.

The unpredictable weather makes planners “more like farmers than anyone else,” Meidell says. A long winter will delay the appearance of camping equipment on the sales floor. Yet suppliers must keep churning out product in expectation of spring. Cascade stores some finished goods in a Seattle warehouse for rapid filling of orders. Work in progress at the four factories can vary widely according to the company’s assessment of need in different markets throughout the year.

In such an environment, good planning and forecasting become crucial. Cascade licensed supply-chain planning software from PeopleSoft in the second quarter of this year. The tool will allow the company to perform constraint-based manufacturing and planning, leading eventually to better scheduling in the plants. Much of Cascade’s existing work in this area is still done on whiteboards and Excel spreadsheets, Pozil says.
Demand forecasting is another future area of focus. Through EnterpriseOne, Pozil says, Cascade will be able to draw on forecasts from four different sources — marketing, sales, operations and historical data — then combine them within PeopleSoft’s Demand Consensus module. Forecasts can be developed for three months, six months, and a year in the future.

Cascade makes some use of supply-chain execution applications within the PeopleSoft product line. The original purchase of OneWorld from J.D. Edwards included warehouse- and transportation-management modules. PeopleSoft intends to beef up those systems with a more advanced tool for running vendor-managed inventory programs, among other things, Pozil says.

Cascade’s supply-chain execution needs remain relatively straightforward. The company hasn’t turned on the advanced warehouse-management system contained within EnterpriseOne. It does continue to use parcel-handling software supplied by UPS and FedEx. “UPS handles the complexity,” Meidell says. “We box it up, stick it on their manifest system and throw it on the truck.”

Upstream to Suppliers

Cascade eventually plans to address its supply chain from the other direction as well. Still in development at PeopleSoft is a module known as Supplier Self-Service. It consists of a portal through which suppliers can view the status of all customer orders on a real-time basis. A foam provider to Cascade, for example, could monitor the buyer’s use of its product throughout the day. It could anticipate big orders and prepare to meet delivery-date requirements without actually receiving notification from Cascade. Other information readily available to suppliers will include the status of invoices and payments by the buyer.

“It’s a big step forward for a lot of customers,” says Pozil, adding that the capability is likely to be fully incorporated into PeopleSoft’s next major release, tentatively scheduled for 2005.

Meidell says some form of supplier self-service has been available in earlier versions of the software. And while Cascade has yet to take advantage of the tool, “It’s on our to-do list. We see it as an area of great opportunity. We’ve spent a lot of time tightening up the supply chain on the customer demand side.”

Cascade has about a dozen key suppliers. An automated forecasting system would cut down on faxes and other time- consuming manual processes, he says.
Outside of PeopleSoft, Cascade uses data-collection technology from Overland Park, Kan.-based Data Systems International Inc. Earlier this year, DSI expanded its alliance with PeopleSoft for joint development of radio frequency identification (RFID) systems.

Also on Cascade’s agenda is a human resources module within EnterpriseOne, a project the company hopes to complete next year, and the conversion to an enterprise license, with fees based on company revenues. Licenses for J.D. Edwards software were calculated strictly according to the number of named users, an approach still favored by many.

But not Cascade. “If your business is not growing, or is shrinking, named users are a better deal,” says Meidell. Cascade, by contrast, plans to keep on growing through acquisition and diversifying its revenue stream, making the enterprise license a more sensible approach, he says. Cascade’s revenues currently stand at just under $100m. It has around 430 employees, and expects to top 500 in the near future.
Pozil contrasts Cascade with many other Seattle-based companies, which sprang up to serve larger entities such as Boeing, and are content to stay small. “They [Cascade] are doing a lot of things that bigger companies are already doing, or striving to do,” he says. “They think like a big company.”

One possible obstacle to the continuing relationship between Cascade and PeopleSoft is the latter’s potential acquisition by Redwood Shores, Calif.-based Oracle Corp. Oracle’s hostile takeover bid was triggered by PeopleSoft’s J.D. Edwards acquisition. More recent developments, including the firing of Conway and the dismissal of a U.S. Department of Justice antitrust suit against Oracle, have raised the possibility that the deal will go through. That has sparked questions among PeopleSoft’s customers, especially those running EnterpriseOne, which is aimed mostly at mid-sized companies.

Cascade’s preference is for PeopleSoft to remain independent, Meidell says. “We don’t want a white knight or Oracle.” Should Oracle succeed in buying PeopleSoft, “we’re not panicking,” he says. Cascade would continue to run EnterpriseOne and has no plans for switching to an Oracle equivalent. He cites EnterpriseOne’s compatibility with the Microsoft platform as a major reason. Any change would require Cascade’s IT staff to “completely rip out the plumbing.”

“These are really, really long bets for us,” Meidell says. “The software has got an awful lot to it, and if Oracle never extends it at all, we could run it for 10 years without having to worry about it. If they don’t support it, we would probably go off maintenance and do it ourselves.”
None of which should interfere with Cascade’s plans for success — plans that were laid out from the start. “Lee [Fromson] knew the industry was going to mature and grow,” says Meidell, “and that we would either be marginalized, or be relevant.”